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On-chain data shows the Bitcoin Net Unrealized Profit and Loss (NUPL) is forming a golden cross, a sign that could be bullish for the price.
Bitcoin NUPL 60-Day MA Has Crossed Above 365-Day MA
An analyst in a CryptoQuant post pointed out that this crossover pattern has been repeated multiple times since 2013. The “Net Unrealized Profit and Loss” (NUPL) is an indicator that tells us about the amount of unrealized profit or loss that Bitcoin investors are currently holding.
By “unrealized,” what’s meant here is that holders have yet to sell/transfer their coins to harvest the profit or loss they have accumulated. If the investors were to sell these coins, the same amount of profit/loss they were carrying would become “realized.”
The NUPL calculates this unrealized profit/loss by subtracting the realized cap (a capitalization model for BTC that accounts for the price at which each coin on the chain was bought) from the market cap. The metric then simplifies this value by dividing it by the market cap.
When the metric has a positive value, the average investor holds an unrealized profit, while negative values suggest unrealized losses dominate the market. Naturally, the indicator having a value equal to zero implies the holders are just breaking even currently.
Here is a chart showing the trend in two moving averages (MAs) of the Bitcoin NUPL: the 60-day and 365-day versions.
Looks like these two metrics have crossed each other in recent days | Source: CryptoQuant
BTC has observed strong bullish momentum whenever the 60-day MA crosses over the 365-day MA. There have been some exceptions, however. In the above graph, the quant has marked the relevant points of the trend for the 60-day and 365-day MAs of the Bitcoin NUPL.
The graph shows that the last time this kind of crossover took place was in late 2021 when the bull run of this cycle was at its top. But not too long after, the opposite type canceled this golden crossover, and BTC only saw a bearish effect.
Recently, the MAs of the Bitcoin NUPL have once again started to form the bullish crossover formation. This time, at least so far, the breakout looks like a proper one as the 60-day has sharply surged above the 365-day already, unlike the previous instance, where the former never gained too much height above the latter before curling back in and forming the opposite crossover.
If the latest golden cross indeed ends up being the real thing, then BTC may be gearing up for a strong bull rally if the historical pattern is anything to go by.
At the time of writing, Bitcoin is trading around $26,600, up 34% in the last week.
BTC seems to have surged recently | Source: BTCUSD on TradingView
Featured image from Dylan Leagh on Unsplash.com, charts from TradingView.com, CryptoQuant.com